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A Russian victory will cost Germany 900-1900% more than aid to Ukraine.

Germany will provide Ukraine with a record €2.7B in military aid. 

Olaf Scholz and Volodymyr Zelenskyy

An analytical note published by the Kiel Institute of the World Economy points out that, contrary to claims about vast amounts of aid sent to Ukraine, Germany’s military support is low from a macroeconomic point of view. Since the start of the Russian aggression, Germany has provided €10.6B in military aid to Ukraine (about €4B per year, or 0.1% of GDP).

“However, the termination of this aid and Russia’s victory may cost 900-1900% more every year. For Germany, we estimate the costs to be from 1% to 2% of GDP per year,” experts assert.

Therefore, Germany has a direct economic interest in continuing, and even significantly increasing, its military support for Ukraine. The three primary factors that will lead to high additional costs following the termination of support and the Russian Federation’s victory: the influx of new refugees, Germany’s subsequent need to increase its contribution to European security, and costs stemming from trade disruption and loss of direct investment in Ukraine.

However, Moscow will only be persuaded to begin serious peace talks if Putin’s regime has no chance of military victory.

 

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